Typically, the department is interested in knowing the source of funds used for the purchase.
When the department sends out a notice, you would be expected to furnish the required documents proving the funds are your own and have been accounted for while filing returns.
Those opting for a bank loan will have their bank statements and loan agreements with the bank scrutinised.
The matter could get complicated if you have taken a loan from friends and relatives. They would be required to produce letters the loan and other documents.
If the department suspects foul play, it would then open their accounts for further verification. Queries regarding the sale of property are related to the payment of relevant taxes.
Taxes are calculated on the basis of the value determined by the stamp duty authorities. If the I-T authorities find one guilty of evading taxes, the amount involved is considered as his income and taxed accordingly.
He will end up paying an interest on the taxable amount, along with a penalty equivalent to 100- 300 percent of the taxable amount. Usually, the department would send you a notice within six months of the end of the financial year and call for a hearing immediately. However, having the power to reopen cases, the department has been known to scrutinise three- four year-old accounts.
While most cases are resolved earlier, some could go on for seven to eight years. In the worst scenario, it could stretch further if both parties appeal and counter-appeal judgments. According to tax experts, one sure way to avoid being haunted by the taxman’s notice is to keep all property-related documents, especially those revealing the source of funds, safe and secure. |
